Update on My Three CEOs

In Investment Thoughts: Investing in Great Management and Strong Results for Disney (DIS) I detailed my thoughts on one way I select stocks to invest in -- find driven, smart CEOs and buy their stocks. Since this method has worked well for me several times in the past, I pick up a stock here and there when I feel like they have a really great CEO who's going to make things happen.

I currently have three stocks I bought for this reason and I thought I'd detail how they are doing so far. Here goes:

• Disney (DIS) -- Up 39.5% since purchase (bought at $25.04 per share, trading at $34.94 as of this writing.) I bought this stock a bit over a year ago and it's been a big winner. And the Steve Jobs effect I wrote about hasn't even kicked in yet. (BTW, I know Steve Jobs is not the CEO at Disney, but he's on the board, is the largest shareholder, and I know he'll have an impact. Besides, Iger seems to be doing a good job by himself anyway.) Hopefully, there's a lot of upside for the House of Mouse.
  
• Home Depot (HD) -- Down 6.5% since purchase (bought at $42.11 per share, trading at $39.36 as of this writing.) This is actually up a bit since Bob Nardelli resigned. Him leaving has my whole strategy out of whack on this stock and I'm still deciding whether I should keep HD for the long term or get out of it.

• J.P. Morgan Chase (JPM) -- Up 15.6% since purchase (bought at $45.33 per share, trading at $52.38 as of this writing.) Still lots of work to be done at this bank, but I'm still bullish on Dimon. And the return so far has been good (I bought it less than a year ago) while they're getting the kinks out. ;-)

So, for now my track record is decent. I have one big winner, one decent performer, and one loser. Average them out and I'm at a 16.2% return on the three of them (I know this is a simplistic number, but I'm just looking for a ballpark.) If I could do 16.2% a year on all my investments, I'd REALLY be well-off. ;-)

Comments

[CPA1298]

FMF - I'm surprised to see you picking stocks; I thought you believed in index investing. Is this 'fun money', or something you do with a significant % of your portfolio?

Over what time frame did you earn 16%? The S&P500 and Dow did that much or better in 2006. Depending on your holding period, you would've been a lot better off in a simple index fund.

[FMF]

CPA --

Yes, index funds are my focus and yes this is my "fun" investing money. It's a small portion of my portfolio.

I've held each of these roughly a year -- give or take a couple months.

[Chris]

Where do you buy your stocks? How do you avoid the heavy fees that all the online trading brokers attach?

[FMF]

Chris -- I use only discount brokers.